A liquidator or an administrator has a duty to file a return with the Insolvency Service for each person that has acted as a director of a company in the three years before the company was placed into liquidation/administration. The Insolvency Service will then decide whether there is sufficient evidence of wrongdoing or reckless behaviour to warrant a disqualification. Examples of this type of behaviour might include:
- Trading whilst insolvent so that a company continues to trade when the directors should have known that it could not meet its liabilities as and when they fall due.
- Not maintaining proper accounting records so that the directors are able to establish the true trading position of the company at any time.
- Failing to file accounts at Companies House
- Using tax (PAYE, VAT, corporation tax and others) to fund the company by failing to pay the tax over to HM Revenue and Customs.
- Misappropriating the company’s money for personal use.